petition for rehearing en banc - How Appealing

Case: 07-4080 Document: 108 Filed: 10/29/2010 Pages: 15
Nos. 07-4080, 08-1030, 08-1072, 08-1106 9
That Black and the others might start a paper in Mammoth
Lake to compete with APC’s tiny newspaper there
was a ridiculous idea; no one would pay them to promise
not to do something they obviously would never want
to do. But they argued that really the $5.5 million represented
management fees owed them, and that they
had characterized the fees as compensation for granting
covenants not to compete in the hope that Canada,
where a substantial percentage of the management fees
had been generated, might not treat the fees as taxable
income. Although Hollinger is a large, sophisticated,
public corporation, no document was found to indicate
that the $5.5 million expenditure was ever approved by
the corporation or credited to the management-fees
account on Hollinger’s books. The checks were drawn on
APC even though there was evidence that the defendants
had no right to management fees from that entity, and
the checks were backdated to the year in which APC had
sold most of its newspapers, the purpose being—or so the
jury could find—to make the richly compensated covenants
not to compete seem less preposterous.
The evidence was certainly sufficient to prove a pecuniary
fraud, see Cleveland v. United States, 531 U.S. 12, 19-
20 (2000); United States v. Orsburn, 525 F.3d 543, 546
(7th Cir. 2008); United States v. Henningsen, 387 F.3d 585,
589-90 (7th Cir. 2004), and the jury was correctly instructed
on the elements of such a fraud. But it was also
instructed that it could convict the defendants upon
proof that they had schemed to deprive Hollinger and its
shareholders of their right to the defendants’ honest